Taxpublishers.in - Monday Corner Answer to the Quiz for the week (30 Sep 2024)

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Quiz for the week (30 Sep 2024): Sarita Ltd, Delhi resorted to buy back of shares during the financial year 2023-24. Harita Ltd, Mumbai came up with public issue of shares during the same period. Harita Ltd did not furnish the details of share allotment and was issued notice by the specified authority under the income-tax Act for furnishing the same which was delayed by 20 days beyond the time given in the notice. Sarita Ltd furnished the details of share buy-back on 31st August,2024. Discuss the parameters for furnishing the details and penal consequence for the delays, if any. Best Answer : For Sarita Ltd who resorted to buy-back of shares and Harita Ltd who came up with public issue of shares have to take note of rule 114E of Income-tax rules, 1962 which mandates furnishing of a statement of financial transaction in Form No.61A in accordance with section 285BA of the Act. In the case of buy-back of shares from any person for an amount or value aggregating to Rs.10 lakhs or more in a financial year it has to be reported by the company listed on a recognised stock exchange for purchase of its own securities under section 68 of the Companies Act, 2013. In the case of public issue of shares receipt from any person of an amount aggregating to Rs.10 lakhs or more in a financial year for acquiring shares, including share application money must be reported by the company issuing shares. Section 285BA makes reference to furnishing of statement in accordance with rule 114E. The time limit for furnishing the statement under rule 114E is 31st day of May of immediately following financial year in which the transaction was registered or recorded. Section 271FA prescribes the quantum of penalty. If a person who is required to furnish a statement of financial transaction fails to furnish such statement he shall be punishable with a penalty of Rs.500 for every day during which the failure continues. Where such person fails to furnish the statement within the period specified in the notice issued under section 285BA he shall be liable to pay by way of penalty, a sum of Rs.1000 for every day during which the failure continues, beginning from the day immediately following the day on which the time specified in such notice for furnishing the statement expires. Sarita Ltd furnished the statement under section 285BA on 31st August, 2024. It is liable for penalty @ Rs.500 per day up to 30th August, 2024. In the case of Harita Ltd the delay was 20 days beyond the date given in the notice. The penalty @ Rs.1000 per day is payable for 20 days being the delay beyond the date given in the notice which is in addition to the penalty payable at Rs.500 per day till the date of issue of notice. For example, if a notice was issued on 1st August, 2024 seeking furnishing of statement by 1st September 2024 and it was actually furnished by the assessee on 21st September, 2024, the penalty payable is @ Rs.500 per day from 1st June, 2024 and up to 31st August, 2024 and @ Rs.1000 per day from 1st September 2024 to 20th September 2024.

Quiz for the week (30 Sep 2024):

Sarita Ltd, Delhi resorted to buy back of shares during the financial year 2023-24. Harita Ltd, Mumbai came up with public issue of shares during the same period. Harita Ltd did not furnish the details of share allotment and was issued notice by the specified authority under the income-tax Act for furnishing the same which was delayed by 20 days beyond the time given in the notice. Sarita Ltd furnished the details of share buy-back on 31st August,2024. Discuss the parameters for furnishing the details and penal consequence for the delays, if any.

Best Answer :

For Sarita Ltd who resorted to buy-back of shares and Harita Ltd who came up with public issue of shares have to take note of rule 114E of Income-tax rules, 1962 which mandates furnishing of a statement of financial transaction in Form No.61A in accordance with section 285BA of the Act.

In the case of buy-back of shares from any person for an amount or value aggregating to Rs.10 lakhs or more in a financial year it has to be reported by the company listed on a recognised stock exchange for purchase of its own securities under section 68 of the Companies Act, 2013.

In the case of public issue of shares receipt from any person of an amount aggregating to Rs.10 lakhs or more in a financial year for acquiring shares, including share application money must be reported by the company issuing shares.

Section 285BA makes reference to furnishing of statement in accordance with rule 114E. The time limit for furnishing the statement under rule 114E is 31st day of May of immediately following financial year in which the transaction was registered or recorded.

Section 271FA prescribes the quantum of penalty. If a person who is required to furnish a statement of financial transaction fails to furnish such statement he shall be punishable with a penalty of Rs.500 for every day during which the failure continues. Where such person fails to furnish the statement within the period specified in the notice issued under section 285BA he shall be liable to pay by way of penalty, a sum of Rs.1000 for every day during which the failure continues, beginning from the day immediately following the day on which the time specified in such notice for furnishing the statement expires.

Sarita Ltd furnished the statement under section 285BA on 31st August, 2024. It is liable for penalty @ Rs.500 per day up to 30th August, 2024.

In the case of Harita Ltd the delay was 20 days beyond the date given in the notice. The penalty @ Rs.1000 per day is payable for 20 days being the delay beyond the date given in the notice which is in addition to the penalty payable at Rs.500 per day till the date of issue of notice. For example, if a notice was issued on 1st August, 2024 seeking furnishing of statement by 1st September 2024 and it was actually furnished by the assessee on 21st September, 2024, the penalty payable is @ Rs.500 per day from 1st June, 2024 and up to 31st August, 2024 and @ Rs.1000 per day from 1st September 2024 to 20th September 2024.